The Sankei newspaper said on Wednesday that Honda Motor Co., Ltd. is thinking about building a separate supply chain that would make it less dependent on China. This would be a high-profile move by a major Japanese manufacturer.
Many big Japanese companies have built huge production hubs in China, but COVID-19-related lockdowns have recently slowed down their work. Tensions between the United States and China are also causing more and more people to worry about what will happen.
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In the last financial year, nearly 40% of the cars Honda made were made in China.
The Sankei said that Honda would keep its supply chain in China for the domestic market in the world’s second-largest economy, but would build a different one for markets outside of China. It didn’t say where the facts came from.
A Honda spokesperson said that the company hasn’t said anything about the Sankei report. They also said that the company has been working to review and reduce risks in its supply chain in general.
“The review of the supply chain from China and risk hedging are things that need to be thought about, but they are not the same as the goal of decoupling,” the spokesperson said.
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The government used to give companies incentives to bring production back to Japan, but the response was slow. Some executives and analysts said it would be hard for Japan Inc. to suddenly leave a market where it had built up production and logistics hubs over time.
Still, after the strict COVID-19 lockdowns in Shanghai, some companies have already tried to reduce how much they depend on China.
Mazda Motor (OTC:MZDAY) Corp, another Japanese automaker, said this month that it would ask its parts suppliers to increase stockpiles in Japan and make components outside of China. This is because the supply chain was thrown off by the lockouts, which forced it to stop domestic production for 11 days in April and May.
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Mazda said that when it makes long-term contracts with suppliers to design new models, it will try to include things like more inventory in the United States and more production outside of China.
